Accounting Policies of Kanika Infrastructure & Power Ltd. Company

Mar 31, 2012

A. Basis of Preparation

These Financial Statements have been prepared in accordance with the
generally accepted accounting principles in India under the historical
cost convention on accrual basis, except for certain financial
instruments which are major at fair value. The financial statements
have been prepared to comply in the material aspects with the
accounting standard notified under section 211(3C) [Companies
(Accounting Standards) Rules, 2006 as amended] and other relevant
provisions of the Companies Act, 1956.

b. Principals of Consolidation

These Financial Statements of the subsidiaries companies used in the
consolidation are drawn up to the same reporting date as of the Company.

The Consolidated Financial Statements have been prepared on the
following basis:- i. The Financial Statements of the Company as its
subsidiaries Companies have been combined on line-by-line basis by
adding together like item of assets, liabilities, income & expenses.
Inter-Company balances and transactions and unrealized profits or
losses have been fully eliminated.

c. Use of Estimates

The preparation of Financial Statements requires the management of the
group to make estimates and assumptions that affect the reported
balance of assets and liabilities and disclosures relating to the
contingent liabilities as at the date of the Financial Statements and
reported amounts of income and expenses during the year. Example of
such estimates include provisions for doubtful debts, employee
benefits, provisions for income taxes, accounting for contracts costs
expected to the incurred, the useful lives of depreciable fixed assets
and provisions for impairment.

d. Fixed Assets

Fixed Assets are stated at cost, less accumulated
depreciation/amortization. Costs include all expenses incurred to bring
the assets to its present location and conditions.

e. Investments

Long-term investments and current maturities on long term investments
are stated at cost, less provisions for other than temporary diminution
in value. Current Investments, except for current maturities of long
term investments, are stated at the lower of cost and fair value.

f. Employee Benefits

1. Contributions to defined contribution scheme such as provident fund
and family pension fund are charged to the profit and loss account as
incurred.

2. Leave encashment are accounted for at the time of encashment.

3. As per payment of Bonus Act, Bonus is not payable for the Financial
Year 2011-2012.

4. The Company has completed Eight years of operations but none of
employees is in duty of the company for above 5 years hence provision
for Gratuity Act not required.

g. Taxation

Current Income tax expense comprises taxes on income from operation in
India and in foreign jurisdiction. Income tax payable in India is
determined in accordance with the provisions of the Income Tax Act,
1961. Tax expenses relating to overseas operation is determined in
accordance with tax laws applicable in countries were such operations
are domiciled.

Minimum alternative tax (MAT) paid in accordance with the tax laws,
which gives ride to future economic benefits in the form of adjustment
of future Income tax liability, is considered an asset if there is
convincing evidence that the Group will pay normal Income tax after the
tax holiday period. Accordingly, MAT is recognized as an asset in the
balance sheet when it is probable that the future economic benefit
associated with it will flow to the Group and the asset can be measured
reliably.

Deferred tax expense or benefit is recognized on timing differences
being the difference between taxable incomes and accounting income that
originate in one period and are capable of reversal in one or more
subsequent periods. Deferred tax assets and liabilities are measured
using the tax rates and tax laws that have been enacted or
substantively enacted by the balance sheet date.

In the event of unabsorbed depreciation and carry forward of losses,
deferred tax assets are recognized only to the extent that there is
virtual certainty that sufficient future taxable income will be
available to realize such assets. In other situations, deferred tax
assets are recognized only to the extent that there is reasonable
certainty that sufficient future taxable income will be available to
realize these assets.

h. Foreign currency transactions

The Company is accounting in foreign exchange transactions at the
exchange rate prevailing on the date of transaction the gain/loss
resulting out of foreign currency transaction are accounted for as and
when actual remittance is made/ received. At the yearend outstanding
in foreign currency are computed and any loss arise out of that is
provided for in the book as per AS-11.

i. Inventories

Raw materials, sub-assemblies and components are carried at the lower
of cost and net realizable value. Cost is determined on a purchase
basis. Purchased goods-in-transit are carried at cost. Finished goods
produced or purchase by the Group is carried at the Purchase value.
Cost includes direct material and labor cost and a portion of
manufacturing overheads.

j. Provisions, Contingent liabilities and Contingent assets

A provision is recognized when the Group has a present obligation as a
result of past event and it is probable that an outflow of resources
will be required to settle the obligation, in respect of which reliable
estimate can be made.

Provisions (excluding retirement benefits) are not discounted to its
present value and are determined based on best estimate required to
settle the obligation at the balance sheet date. These are reviewed at
each balance sheet date and adjusted to reflect the current best
estimates. Contingent liabilities are not recognized in the financial
statements.

A contingent asset is neither recognized nor disclosed in the financial
statements.

k. Purchase The Company accounts for purchase of goods and materials
on the date of finalization of purchase contract and on receipt of goods.

l. Sale

Revenue from sale of goods is recognized upon passing of title, which
generally coincides with delivery.

m. Depreciation Depreciation on fixed assets is on "Written Down Value
Basis" at the rates specified in Schedule XIV to the Companies Act, 1956
from the date the same is put to use.

n. Deferred Tax Liability/Assets Deferred Taxation liability/asset has
been provided in the books up to the period 31-03-2012.

Mar 31, 2011

1) ACCOUNTING CONVENTION

The financial statements are prepared under historical cost convention
in accordance with the mandatory Accounting Standards and the relevant
provisions of the Companies Act, 1956, and followed consistently by the
Company.

2) SYSTEM OF ACCOUNTING

The company adopts accrual basis of accounting in the preparation of
accounts except interest on income tax refund, filling fee, which is
accounted on the basis of communication received from income tax
department.

3) PURCHASE

The Company accounts for purchase of goods and materials on the date of
finalization of purchase contract and on receipt of goods.

4) SALE

Revenue from sale of goods is recognized upon passing of title, which
generally coincides with delivery.

5) STOCK

The Stock of goods is accounted on the basis of cost including
acquisition cost or the market value which ever is lower on the
valuation date.

6) FIXED ASSETS

Fixed Assets are stated at cost less depreciation. Fixed Assets are
capitalized at the cost of acquisition including all expenses directly
attributable to bringing the assets to it 's working condition for
intended use.

7) DEPRECIATION

Depreciation on fixed assets is on "Written Down Value Basis" at the
rates specified in Schedule XIV to the Companies Act, 1956 from the
date the same is put to use.

8) EMPLOYEE BENEFIT

a) Contributions to defined contribution scheme such as provident fund
and family pension fund are charged to the profit and loss account as
incurred.

b) Leave encashment are accounted for at the time of encashment.

c) As per payment of Bonus Act, Bonus is not payable for the Financial
Year 2010-2011.

d) The Company has completed eight years of operations but non of
employee is in duty of the company for above 5 years hence provision
for Gratuity Act not required.

9) DEFERRED TAX LAIBILITY/ASSETS

Deferred Taxation liability/asset has been provided in the books up to
the period 31-03-2011.

10) FOREIGN CURRENCY TRANSACTION

The Company is accounting in foreign exchange transactions at the
exchange rate prevailing on the date of transaction the gain/loss
resulting out of foreign currency transaction are accounted for as and
when actual remittance is made/received. At the year end outstanding in
foreign currency are computed and any loss arise out of that is
provided for in the book as per AS-11.

Mar 31, 2010

1) ACCOUNTING CONVENTION

The financial statements are prepared under historical cost convention
in accordance with the mandatory Accounting Standards and the relevant
provisions of the Companies Act, 1956, and followed consistently by the
Company.

2) SYSTEM OF ACCOUNTING

The company adopts accrual basis of accounting in the preparation Of
accounts except interest on income tax refund, filling fee, which is
accounted on the basis of communication received from income tax
department.

3) PURCHASE

The Company accounts for purchase of goods and materials on the date of
finalization of purchase contract and on receipt of goods.

4) SALE

Revenue from sale of goods is recognized upon passing of title, which
generally coincides with delivery.

5) STOCK

The Stock of goods is accounted on the basis of cost including
acquisition cost or the market value which ever is lower on the
valuation date.

6) FIXED ASSETS

Fixed Assets are stated at cost less depreciation. Fixed Assets are
capitalized at the cost of acquisition including all expenses directly
attributable to bringing the assets to it's working condition for
intended use.

7) DEPRECIATION

Depreciation on fixed assets is on "Written Down Value Basis" at the
rates specified in Schedule XIV to the Companies Act, 1956 from the
date the same is put to use.

8) EMPLOYEE BENEFIT

a) Contributions to defined contribution scheme such as provident fund
and family pension fund are charged to the profit and loss account as
incurred.

b) Leave encashment are accounted for at the time of encashment.

c) As per payment of Bonus Act, Bonus is not payable for the Financial
Year 2008-2010.

d) The Company has completed eight years of operations but non of
employee is in duty of the company for above 5 years hence provision
for Gratuity Act not required;

9) DEFERREDTAX LA1B1LITY/ASSETS

Deferred Taxation liability/asset has been provided in the books up to
the period 31-03-2010.

10) FOREIGN CURRENCY TRANSACTION

The Company is accounting in foreign exchange transactions at the
exchange rate prevailing on the date of transaction the gain/loss
resulting out of foreign currency transaction are accounted for as and
when actual remittance is made/received. At the year end outstanding in
foreign currency are computed and any loss arise out of that is
provided for in the book as per AS-11.